Ezchip Soars 16% as Cisco ‘NCS’ Calms Fears of Business Lost

By Tiernan Ray

Shares of networking processor maker Ezchip Semiconductor (EZCH) are up $3.57, or almost 16%, at $26.07, bouncing back from two weeks of concern the company was going to be designed out of Cisco Systems (CSCO) routers.

Finally, today, the other shoe dropped, as Cisco this morning announced a new set of carrier routing products, the “Network Convergence System,” or NCS. That product uses the nPower chips, but the announcement has suggested to the Street that nPower will not push out Ezchip parts in other segments of Cisco’s portfolio.

Feltl & Co.’s Jeffrey Schreiner, who had previously defended the stock against the hand-wringing, this morning reiterated his Strong Buy rating, writing that the Cisco announcement makes clear Ezchip will retain its position:

This morning CSCO announced its new nPower X1 NPU would be designed into the company’s CRS-X core router and new convergence systems NCS 2000/4000/6000. Neither of these systems previously used, or were scheduled to use, EZCH’s NPUs. We believe the nPower X1 NPU replaces prior internal CSCO design. Given the announced nPower products do not compete with current EZCH- based products, such as the ASR-9000, we don’t believe the EZCH growth story has changed. We believe both NP-4/NP-5 designs within CSCO remain intact.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.